Bookkeeping · United KingdomYour VAT return and MTD updates come straight from your books. We keep those books current.
We record your sales, purchases, bank and payroll transactions in HMRC-recognised software each month, so VAT returns, Making Tax Digital updates and year-end accounts start from records that are already right.
Accounting
At a glance
- Authorities
- HM Revenue & Customs (HMRC) · Companies House
- Forms & references
- VAT Return (MTD)MTD for Income Tax quarterly updatesCT600SA103
- Software
- Xero, QuickBooks, FreeAgent or Sage
- MTD for VAT
- Applies to every VAT-registered business
- MTD for Income Tax
- From 6 April 2026 above £50,000; £30,000 from 2027, £20,000 from 2028
- Keeping records
- Companies: at least 6 years from the end of the financial year
Overview
What it is, and why it matters.
Bookkeeping is the day-to-day record of what your business earns and spends. In the UK those records increasingly have to be digital: every VAT-registered business must keep digital records and file VAT returns through MTD-compatible software.
Making Tax Digital for Income Tax now reaches sole traders and landlords too. It began on 6 April 2026 for those with qualifying income over £50,000 and is due to extend to those over £30,000 from April 2027 and over £20,000 from April 2028, with quarterly updates sent to HMRC from the software. Limited companies are outside MTD for Income Tax, but their VAT returns and statutory accounts depend on the same quality of records.
We work in Xero, QuickBooks, FreeAgent or Sage, keep VAT coded correctly (including the reverse charge on services bought from overseas suppliers), and maintain a running director’s loan account so there are no surprises at the year end.
Who needs it
Who typically needs it.
- 01
Owner-managed limited companies
Directors who want accurate monthly figures, a clear director’s loan account, and books ready for statutory accounts and the CT600.
- 02
Sole traders and landlords entering MTD
Self-employed people and landlords whose qualifying income brings them into Making Tax Digital for Income Tax and who now need quarterly digital records.
- 03
VAT-registered businesses
Businesses that have passed the VAT registration threshold (£90,000 at the time of writing) or registered voluntarily, and file VAT returns each quarter.
- 04
Online sellers and importers
Amazon, Shopify and Etsy sellers with marketplace fees to separate from sales, and importers using postponed VAT accounting.
- 05
Overseas founders of UK companies
Directors in Pakistan, the US or elsewhere running a UK limited company remotely, who need its records kept to UK rules.
When you need it
The moments that usually trigger it.
- You’ve just incorporated a UK company and want the books set up before the first VAT return or year end.
- Your self-employment or property income puts you inside MTD for Income Tax.
- You’ve registered for VAT and your first return is due.
- You keep records in spreadsheets and need to meet the MTD digital record-keeping rules.
- Your director’s loan account may be overdrawn and you don’t know by how much.
- Your year end is close and several months of bank transactions are still uncoded.
Scope
Exactly what we handle.
Our engagement letter lists these specifically, so you know what is included before any work begins.
- 01
Setting up or tidying your chart of accounts and VAT codes in Xero, QuickBooks, FreeAgent or Sage.
- 02
Recording sales, purchases and bank transactions monthly, with receipts and invoices attached.
- 03
Correct VAT treatment, including the reverse charge on overseas services, postponed import VAT and the domestic reverse charge for construction services.
- 04
A director’s loan account kept up to date throughout the year, not rebuilt at the year end.
- 05
Payroll journals posted from your payroll software’s RTI reports.
- 06
Sales and purchase ledgers, with aged debtor and creditor reports.
- 07
Records kept in the form VAT returns and MTD for Income Tax quarterly updates require.
- 08
A monthly profit and loss account and balance sheet, with open questions listed.
The process
How it runs, step by step.
Timings depend on the authority and on how quickly documents come together. We tell you what’s typical for your case at the start.
Start with a conversationReview your set-up
We look at your business type, VAT registration and scheme, software and bank accounts, and whether MTD for Income Tax applies to you.
Set up or clean up
We connect bank feeds, set VAT codes and opening balances from your last accounts or tax return, and list any months that need catching up.
Monthly processing
Transactions are coded, invoices and bills matched, and director transactions posted to the loan account. Questions come to you in one batch.
Review before each VAT return or MTD update
We reconcile the bank, check VAT codes and review unusual items before figures are submitted.
Reports and year-end handover
You receive monthly reports, and at the year end a reconciled trial balance for your statutory accounts and Company Tax Return, or your Self Assessment.
What we’ll need
The information to have ready.
A typical checklist. After the first conversation we send a version specific to your situation, so you don’t gather anything you don’t need.
Business details
- Company number or Unique Taxpayer Reference (UTR), and VAT number if registered
- VAT scheme (standard, flat rate or cash accounting) and return periods
- Last filed accounts or Self Assessment return
Access
- Adviser access to Xero, QuickBooks, FreeAgent or Sage
- Bank feeds or statements for every business account
- Payroll reports, if you run payroll
Month to month
- Sales invoices and purchase receipts
- Postponed import VAT statements, if you import goods
- Notes on anything you paid personally for the business, or took from it
Please don’t email passports or bank statements. Once we’ve spoken, you’ll get access to a secure upload.
Common mistakes
Where this usually goes wrong.
The problems we are most often asked to fix, and what they tend to cost.
- Mistake 01
Mis-coding VAT on overseas purchases
Software subscriptions and advertising bought from non-UK suppliers usually fall under the reverse charge. Coding them as “no VAT”, or reclaiming VAT that was never charged, leads to incorrect returns.
- Mistake 02
Treating the company account as a personal one
Personal spending from a company account belongs in the director’s loan account. Left unrecorded, an overdrawn balance can bring a section 455 tax charge if it isn’t repaid within nine months of the year end, and benefit-in-kind issues on larger loans.
- Mistake 03
Keying VAT figures in by hand
Under MTD, VAT figures must flow digitally from your records to HMRC. Copying totals from a spreadsheet into a filing tool by hand breaks the digital link the rules require.
- Mistake 04
Deleting records too soon
HMRC expects company records to be kept for at least six years from the end of the financial year they relate to, and longer in some cases. Cancelling an old cloud subscription can delete those records with it.
Worth knowing
The limits, stated upfront.
We rely on the records and explanations you give us. Bookkeeping is not an audit.
Submitting VAT returns and MTD updates to HMRC is covered by our Tax Filing service unless we agree to include it here.
Running payroll and making RTI submissions are not included unless agreed separately.
MTD thresholds and dates are set by HMRC and have moved before; we confirm what applies to you when we scope your work.
Questions
Bookkeeping: frequently asked.
If yours isn’t here, ask us directly. We’ll answer in plain terms.
Ask a questionDo I have to use Making Tax Digital for Income Tax?
If you are a sole trader or landlord with qualifying income over £50,000, you should be using it from 6 April 2026. The threshold is due to fall to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income means your gross self-employment and property income, not your profit.
Does MTD for Income Tax apply to my limited company?
No. MTD for Income Tax covers individuals with self-employment and property income. A VAT-registered company is covered by MTD for VAT, and its accounts and Company Tax Return still depend on proper records.
Which software should I use: Xero, QuickBooks, FreeAgent or Sage?
All four are widely used in the UK and can file VAT returns under MTD. The best choice depends on your bank, your other apps and who else needs access, and if you already have history in one it is often simplest to stay.
What is a director’s loan account?
It is the running record of money you take from, or lend to, your company outside salary, dividends and expense repayments. If you owe the company money at the year end and don’t repay it within nine months, the company may face a temporary tax charge under section 455.
How long do I need to keep business records?
Limited companies should keep records for at least six years from the end of the financial year they relate to. Sole traders must keep them for at least five years after the 31 January filing deadline for the tax year. Longer periods can apply, for example during an HMRC enquiry.
Can you keep my books if I live outside the UK?
Yes. The work happens in cloud software, and questions can be handled by email or video call. UK record-keeping rules apply to the company wherever its directors live.
Related
Often needed alongside this.
The equivalent in our other countries
Speak with a consultant
Talk to us about bookkeeping.
Pick the closest match and we’ll take it from there. You’ll get a written scope and fee before any work begins.
Or use our three-step guide, or email hello@fiscorra.com
